What is digital asset derivatives trading? 5 Reasons to choose Huobi Future

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The digital asset derivatives market has been showing signs of heating up in recent years. Today's investors are very interested in leveraged digital asset trading. According to a report made by Token Insight, by the end of the third quarter of 2021, there were more than 52 trillion USD in derivative contracts. Digital asset derivatives trading accounts for nearly 36% of total spot trading volume. So how to choose a reputable derivatives exchange? In this article, Hay Mod Game will help you analyze and choose the most ideal derivatives trading platform.

What is digital asset derivatives trading? 

Leveraged digital asset derivatives trading

With trillions of dollars in transactions every month, digital asset derivatives trading is contributing to a large amount of liquidity in the market. Thanks to the application of leverage, flexibly buying and selling a specific asset, without requiring large investment capital, derivative trading in the digital asset market allows investors to profit from price fluctuations according to the price. two directions. 

In addition to price speculation, digital asset derivatives trading is also a tool to protect investors against risks and unexpected fluctuations. This type of transaction is especially useful for coin holders and miners.

5 reasons to choose Huobi Future trading platform 

When choosing a platform for trading digital assets, you need to conduct an overview. Then, delve into the advantages and disadvantages of each platform. Huobi Future is full of elements of a leading Crypto derivatives exchange.

Diversified derivative products 

This is one of the first considerations when choosing a digital asset derivatives trading platform. The diversity of trading products helps investors have more options to optimize profits, manage risks more effectively through a reasonable portfolio allocation.  

Huobi Futures currently supports over 110 assets for USDT . margin contracts

The variety of derivatives trading products is also the basis for considering the margin assets of all types of contracts. For example, a USDT escrow contract uses stablecoin Tether (USDT) as margin. At that time, users can easily trade multiple contracts without buying additional underlying assets.  

In case of trading futures contracts signed in USDT, of course the profit is also calculated in USDT, the profit can be calculated simply. Meanwhile, the coin margin contract uses the underlying asset as the margin asset, and the profit will be calculated according to that asset. As a result, you can make large profits when the price of the underlying asset increases.

Besides, traders also have the right to choose a futures contract or swap function for trading. The choice of transaction type is often based on individual preferences for each investor.  

Example: USDT and coin swap, you can close your positions at any time, as long as there is no liquidation. Typically USDT and futures contracts trade coins with expirations on a weekly, monthly or quarterly basis. The advantage of these types of transactions is that there are no funding fees, which are cheaper than swaps. The funding fee will then be used to fix the spot price.

Huobi Futures currently supports over 110 assets for USDT and coin margin contracts. Includes DeFi , GameFi, NFT, storage, and loads of other options.

High liquidity

Liquidity simply means whether an asset can be bought and sold easily, without affecting the value of the asset itself. When assessing the liquidity of a digital asset derivatives exchange, you need to consider trading volume.

High liquidity makes it easy to enter or exit a position when needed

You should prioritize choosing a platform with a large trading volume. For exchanges with large trading volume, you can easily enter or exit positions when needed.  

In 2020 alone, the Huobi Futures platform generated the equivalent of $2.3 trillion in trading volume. This figure represents a fifth of the total trading volume of the digital asset derivatives market. At the same time, making Huobi Futures the leading platform for derivatives trading in 2020.

Effective risk control mechanism 

A risk control plan is a necessary solution to protect investors against market fluctuations. Then you can reduce the risk of liquidation, get a more optimal trading experience.

Huobi Future applies a 3-stage asset liquidation mechanism to help users manage risk effectively

Huobi Futures currently owns a team of professional risk control experts. In which, Huobi Future's managers and employees are all from leading banks and large investment funds. They are especially experienced in derivatives investment. After only 2 founding, Huobi Futures introduced a 3-stage liquidation protection mechanism. To help users avoid sudden liquidation.

So what is the 3-stage asset liquidation mechanism? How does it protect investors from market volatility? First, you need to understand that liquidation occurs only when the margin is less than or equal to 0%. That means their position must be liquidated. 

Huobi Futures applies a decentralized adjustment coefficient mechanism to complement the 3-stage liquidation process. This mechanism works depending on the number of positions. Accordingly, the larger the net position, the higher the risk.

Let's say the liquidation mechanism activates when the user's adjustment factor is higher than level 1 (applicable with separate margin mode). The three processing stages are performed in turn as follows:

  • In phase 1: The system supports users to cancel all open orders of the asset, these orders are also activated for liquidation.
  •  In phase 2: Several long and short positions of the asset are also taken to ensure the margin is greater than zero.
  • In stage 3: In case the margin is still lower than 0, the system immediately closes and reduces the position to pull the margin greater than 0.

Entire positions are only fully liquidated if the margin is less than 0, after the order of the adjusted coefficient is reduced to 1. With a professional risk control system, Huobi Futures is extremely proud of not to a single recovery from the end of 2018 to present.

Transaction fees and attractive VIP program 

Like most investments, digital asset derivatives trading fees directly affect your returns. Therefore, you should pay attention to choose a platform with competitive transaction fees to improve profit efficiency.  

VIP customers on every exchange are entitled to “VIP + 1 on Huobi Future”

Besides the preferential transaction fee table, VIP programs will bring investors many other benefits. Such as higher API rate limit, extended position limit. This is an important aspect when you are evaluating and choosing a digital asset derivatives trading platform.

In order to better serve the needs of the market, at the end of December 2021 Huobi Futures launched a USDT trading futures contract. Attractive fee discount of 0.015% applies to manufacturers, while to market makers and buyers fees as low as 0.02%. VIP customers also receive the same applicable fee.

Huobi Futures uses USD currency instead of BTC to quote and rank the VIP level of customers. Thanks to that, this exchange has solved the virtual rating situation when the price of BTC increases. Through the introduction of the 2020 VIP Share program, Huobi allows VIP customers of any exchange to enjoy the “VIP + 1” mode.

Easy to use

When doing digital asset derivatives trading on a certain platform, the friendliness factor is very important. In the event of a problem, users need quick 24/7 support instead of waiting patiently for direct contact with the floor's staff.

Huobi Future's friendly interface makes it easy for users to operate

Huobi Futures has just launched a series of new features. Some of these new things allow users to benefit from an enhanced trading campaign, saving time. For example, the Trailing Stop function helps users to place pre-orders and make profits when the market fluctuates greatly. 

It is not impossible to take profits like that when the market shows signs of recovering after hitting the bottom or the price continues to return to the top of the previous setting. Where the market price meets the trigger price, the strategy immediately triggers a limit order at the preset price.

In other words, in the Huobi Futures platform, users always have a wide choice of trading contracts. You don't have to worry about liquidation risk when trading a large number of derivatives. Huobi Future's customer service is always ready to assist you with any problems.

No matter which digital asset derivatives trading platform you choose  , we wish you a smooth, profitable trading experience in early 2022!

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